The 171 year old British travel group Thomas Cook has reported a massive half year pre-tax loss of $1.097bn, up from $414mn reported last year representing 165% increase in losses. The results were particularly disappointing because the company was able to increase its revenues from $5.28bn achieved last year to $5.42bn.
The company’s main source of revenue are the British families, but the country is going through a tough economic environment and is now, officially, in recession. Its popular African destinations, including Egypt and Morocco, are going through a political turmoil which has made them a very risky place for European tourists.
The company’s high debt structure and significant decline in global travelling activity is attributed as the main reasons. The massive increase in losses, as compared to previous year’s, was due to a $462mn write down. The business has secured a $2.16bn refinance package that entitles it to repay its debts in the next three years.
Despite the results, Thomas Cook is still optimistic about the future. The company is making changes in its financial structuring and aims to eliminate its losses in the coming years.
The firm plans to improve its finances, it will raise $512mn by:
1. Selling its hotel business in Spain
2. Selling and leaseback arrangements for some of its aircrafts
3. Selling all of its Indian operations.
Ms Harriet Green will take over as the new CEO from July and is expected to
a. “Re-energize” the business
b. Reduce the debt levels, considered as the primary obstacle in achieving profitability